Revenue forecasts are the foundation of every company's business plans. Accurate forecasts enable you to: maintain appropriate staffing levels, set realistic sales targets, create effective marketing promotion mixes, build budgets that match operating expenses, and keep inventory at the right level to meet, but not exceed, customer demand.
However, producing such forecasts is usually a tedious and time consuming process. In general, a bottom-up forecasting process is used. The sales personnel create a personal forecast, estimating how much business will be closed by the end of the period. This is then forwarded to their managers, who create a combined estimate for all personnel under them, factoring in additional knowledge and personnel evaluations. This process is repeated, until the forecast reaches the vice-president, or appropriate person in charge.
The entire process generally takes five to seven days, and in a large organization may take up to a month. While such time-spans are acceptable for annual forecasts done at the beginning of the year, they are not appropriate for end-of-quarter evaluations.
Thus, a process that would make forecasting more efficient and more accurate would be advantageous.